Morning Report: 1 February 2018

1st February 2018

GBP Sterling moved slightly higher yesterday, shrugging off the latest political headlines, which include ongoing fallout from leak of Brexit reports, and a potential disagreement over the rights of EU citizens arriving to Britain during the transition period. Today at 09:30 GMT, the Manufacturing Purchasing Managers’ Index, a survey based optimism gauge for the industry, will be released.

EUR The euro weakened only slightly against sterling yesterday and overnight, despite a growing chorus of voices from the European Central Bank attempting to talk the currency down. Executive Board Member Benoit Couere said yesterday that low inflation meant that there was a wide agreement for patience with policy. As if to underline his point, eurozone inflation figures were released on expectation, with the Core Consumer Price Index up only 1% year on year – essentially unimproved since 2014. This morning’s data will revolve around survey based Manufacturing Purchasing Managers Indices from various eurozone countries.

USD Janet Yellen and the Federal Open Market Committee set the stage for a rate hike in the near future with last night’s rate statement, giving USD a small boost on the weighted DXY index, although the greenback continued to struggle against the euro and sterling. Yellen’s last meeting as Fed Chair saw the FOMC upgrade its forecast for inflation, and warn of further rate hikes. This afternoon will see a number of US data releases, beginning with Weekly Unemployment Claims alongside Labour Unit Costs and Productivity data at 13:30 GMT. Manufacturing surveys from ISM and Markit will be released at 14:45 and 15:00, and vehicle sales data will be released throughout the afternoon.

CAD The loonie reached a four month high yesterday afternoon, after Canadian Gross Domestic Product was reported to have growth 0.4% in November, as expected. Since then the loonie has pared back its gains slightly. Today at 14:30 GMT the Manufacturing Purchasing Managers’ Index will be released.

UK news

  • Reuters: Trade minister Fox urges mutinous MPs to lay off PM May. British Trade Minister Liam Fox on Thursday urged lawmakers to take a different view of Prime Minister Theresa May, seeking to play up her international achievements and calm growing criticism of her leadership.
  • Telegraph: Front Bench: Theresa May lays down immigration red line – but door still open to staying in customs union. Liam Fox, the International Trade Secretary, has this morning cast doubt on a Brexit transition deal and failed to rule out Britain staying in a customs union with the EU. Speaking in Beijing, where he his travelling with Theresa May, he twice said “if” in reference to a transition.